Decisions, Decisions

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So I ran into some fun with international sales today…

My POD (Print On Demand) company quotes prices in Dollars when you create products, but then on international sales converts the cost to the local currency and charges you that instead.

The Euro right now is running anywhere from 10-20% stronger, so there’s another chunk of profit eaten up I wasn’t expecting.  (Probably should have – I had read someplace that they do “live” conversions, but it didn’t sink in the first time.  My bad.)

An item I sold to Spain that runs me $16.95 if sold in the USA became $18.08 because of this morning’s Euro exchange rate or an extra US $1.13.  ($1 = .9375 in Euros.)  If the customer had waited until later in the day to make the purchase, it would have cost me even more as the Euro closed around $.84 in US Dollars!

Add to that, just about every country overseas (and Quebec over on this side of the pond) have VAT (Value-Added Tax) or the equivalent on item sales.  Unfortunately, they all have different rates and rules. A nice big tangle!  And to make it more fun, Etsy doesn’t really try to collect it for you on your sales in any way.  They just state “VAT included” to the customer, which implies you’ve already built-in anywhere from an extra 9%-24% in the price to potentially cover it on your end.  Um, yeah, sure, right.

They don’t have a way as of now for you to put a VAT rate anywhere on the product for items going to those countries.  International customers see the same price as the US people who ARE charged the appropriate sales tax on top of the sale price, depending on state, which Etsy collects and remits for you.

I understand it would be hard for them to calculate as it’s based on the cost + shipping total, but when remitted to the tax authority, they would get credit for earlier VAT already paid on the manufacturing cost of the item.  Where would they get those costs so they could take the correct credits?  POD companies or resellers would have to pass those numbers along somehow before Etsy had to pay up…  (Or Etsy could collect the money and “assume” the seller would pass it along to the correct tax authority – someday.  Uh, huh.)

So I have 1 of 3 choices as far as I can see:

  • Increase my base prices a LOT to cover the potential cost of selling internationally while screwing/totally losing any potential USA sales – I sure wouldn’t have “competitive” US prices!
  • Increase my shipping prices a LOT for international shipping to cover potential currency fluctuations and potential VAT costs.  (Avg currency diffs of, say, 15% to be safe plus most common VAT of ~20% equals  35%.)  So what I would have originally sold at, say, $30 + $7 Intl shipping would now need to be $37 *1.35 total, or $49.95 total.  That means I would now need to sell the item for $30 to keep it the same for US/Intl customers, but up Intl shipping to $19.95 to stay profitable with all the overseas”extras” I’m getting hit with.
  • Stop selling internationally completely and save the headaches (and potential negative profits on overseas sales).

For the moment, it’s choice 3 (except for Canada) until I can figure out how to add back international while staying profitable AND not gouging customers on either side of the pond to do it.  <sigh>


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